Choosing the right investment account: GIA or ISA

When you’re looking to grow your wealth, there are some simple things you can do to make your money go further, and it all starts with getting the right investment account for your goals. So, should you pick an ISA or a General Investment Account (GIA)?

There’s no denying that the financial world can be complicated and full of jargon – which can be off putting when you’ve got a busy life to navigate, with other priorities distracting you from completing your personal finance to-do list.

But investing doesn’t need to be complicated. At Moneyfarm, we’re committed to simplifying investments and changing the relationship Brits have with their money.

Does my account impact my investments at Moneyfarm?

No matter whether you’re investing in a Moneyfarm ISA, General Investment Account (GIA) or, you’ll be given the same level of investment advice to help you reach your goals. You can open a number of different investment accounts with Moneyfarm.

If you’re hoping to help your children on the property ladder, are planning a sabbatical, or are planning a career change, you might be looking for a more flexible account to help grow your money. The Moneyfarm Stocks and Shares ISA and General Investment Account may suit your needs, depending on your financial situation.

What is a stocks and shares ISA?

A stocks and shares ISA is a simple and tax-efficient way to grow your money over the long-term. You can invest up to £20,000 each financial year, and any growth in the value of your money and any income can build up protected within your tax-free wrapper.

You usually have to pay capital gains tax on any profit you make on your investments above your annual allowance. This is £11,700 for the 2018/29 tax year. Whilst this sounds like a lot, it’s a realistic target to be aiming for when you’re investing for the long-term.

If you invest your money in an ISA, you won’t need to pay a thing in capital gains or dividend tax. Making the most of the tax benefits available to you is crucial for maximising your returns over the long-term.

The ISA allowance is an individual one, which means couples can invest up to £40,000 in their ISA each year. However, it resets annually and you can’t roll it over into the new tax year, which means you have to use it or lose it!

A common misconception is that you lock your money away when you invest in a stocks and shares ISA. Whilst it’s important to stress how important long-term investing is for your returns, ISAs have evolved to be much more flexible, allowing you to take money out and replace it within the tax year without it affecting your overall allowance.

It’s also getting easier to take your money out. With wealth managers like Moneyfarm, the flexibility of our portfolios and platform means you can get your money out in five working days without paying a thing.

The tax benefits of an ISA are subject to change in the future, so it’s important you make the most of the generous tax benefits available to you.

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Simple yet effective, ISAs are popular with investors of all experience looking to grow their money.

What is a general investment account

General Investment Accounts (GIA) are good options for investors who have already used up their ISA allowance for the year. There are no tax benefits to be found in your GIA, which means there are no limits to how much you can put in each year.

This flexibility means you can put in and withdraw as much as you like from your GIA.

You won’t need to pay dividend tax on any income you get under the £2,000 annual allowance.

You won’t need to pay capital gains tax on any profit you make under the £11,700 threshold, although this allowance includes any profit you make during the tax year, from a business, second home or heirloom, for example.

You don’t want to be stuck in a situation in the future where you have to pay more tax than you need to because you didn’t invest through your ISA.

You can open as many GIAs as you like, however, GIAs usually count as part of your estate for working out how much inheritance tax (IHT) is due. An ISA can be passed onto a spouse free from IHT.

Much like an ISA, you can hold a broad range of investments in your GIA, including funds, shares, investment trusts and ETFs.

Picking the investment account that will help you reach your goals doesn’t need to be difficult, although if you’re unsure you should seek financial advice.

Investment advice

When you invest with Moneyfarm, we provide you with a unique combination of regulated investment advice and discretionary fund management.

After getting to know more about you, your financial background and your goals, we’ll assign you with an investor profile that outlines your risk profile. We’ll then match you with an investment portfolio that’s been specifically built and managed by our team of experienced fund managers to reflect your profile.

You can always give one of our qualified Investment Consultants a call if you’ve got any questions, although we won’t be able to give you advice on which accounts to open.

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Risk warning: By making an investment, your capital is at risk. The value of your MoneyFarm investment depends on market fluctuations outside of our control and you may get back less than you invest. Past performance is no indicator of future performance. Learn more
The tax treatment of a MoneyFarm Stocks and Shares ISA depends on your individual circumstances and may be subject to change in the future. You should seek financial advice if you are unsure about investing in an ISA.

Disclaimer: This publication is considered a marketing communication and as such, it does not contain and should not be taken as containing, investment advice, personal recommendation, or an offer of or solicitation to buy or sell any financial instruments. As a marketing communication, this publication has not been prepared in accordance with the legal and regulatory requirements to promote independent research, and may have been produced in conjunction with the MoneyFarm Asset Allocation Team, whose views and opinions may differ from the opinions expressed by other employees within the organisation, including Directors and Senior Managers. This material may include references to instruments that the firm may, from time to time, include in clients’ portfolios. In producing this material, MoneyFarm has not taken any particular investment objectives or financial situation in particular. MoneyFarm makes no representation and assumes no liability as to the accuracy or completeness of the content of this publication, which has been prepared utilising publicly-available information. This communication must not be reproduced without consent from MoneyFarm.